Vikram Solar Signs MoU to set up 3 GW Manufacturing Facility in Tamil Nadu

Vikram Solar intends to set up a 3 GW solar manufacturing facility in Tamil Nadu, after it signed a Memorandum of Understanding with the state government.

Kolkata-based solar energy module manufacturer and solutions provider – Vikram Solar has announced that it is planning to set up a 3-gigawatt (GW) solar manufacturing facility in Tamil Nadu, after it signed a Memorandum of Understanding with the Tamil Nadu government on July 20, 2020. The firm expects to complete the work on the plant in five years. Solar cell or module plants are usually built in phases, so once work starts, actual production could start much earlier.

The facility would be involved in the manufacturing of solar wafers, cells, and modules. A welcome sign of backward integration, in an industry where critical parts of the chain like wafers and ingots remain almost completely hostage to imports.

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The company stated that its move was in line with the Prime Minister’s vision for Atmanirbhar Bharat. The government is campaigning for a self-reliant India to reduce its import dependence, boost local manufacturing, and increase jobs in the wake of the COVID-19 pandemic and the recent India-China border tensions.

The move by Vikram Solar should be seen as a positive endorsement of the government’s push for manufacturing, coming as it does from an established player without the heavyweight pedigree like the Adani Group. The move to Tamil Nadu will however set the stage for the group to target a wider national presence, as well as a possible drawdown of its presence in home state West Bengal.

According to KPMG in India estimates, renewable energy manufacturing can create over one million jobs by 2025 and be an export-oriented industry if India gets the scale and cost model right.

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The Minister of State for Finance and Corporate Affairs, Anurag Thakur, in a conference last week had said that the Ministry of Finance was planning to impose 20 percent basic customs duty on solar cells, modules, and inverters to discourage imports from other countries.

Recently, the Directorate General of Trade Remedies had also recommended the imposition of safeguard duty on solar cells for one more year to protect domestic manufacturers and discourage cheap imports, specifically from China. It had recommended a 14.9 percent duty for the first six months from July 30 this year and 14.5 percent from the next six months.

India has an installed manufacturing capacity of about 3.1 GW of solar cells and 10 GW of solar modules. However, out of the country’s annual demand of 10 GW solar PV equipment, nearly 85 percent is still imported. Mainly due to quality issues with a significant chunk of manufacturing here.

This move from Vikram Solar comes after ReNew Power’s announcement last week to invest in the range of Rs 1500-2000 crore for setting up a 2-GW manufacturing facility for cells and modules, however, it had added that the location was yet to be finalised and the company was still in talks with some states. Vikram Solar’s announcement thus takes the big capacity announcements to 7 GW now, after adding in Adani Green’s 2 GW plans .  Earlier we had reported that the state government of Tamil Nadu, on July 20, 2020, had signed eight new Memorandum of Understandings (MoU) that bring with them investments worth Rs 10,399 crore in the state in areas including solar cells and modules manufacturing.